CALGARY — Precision Drilling Corp., Canada’s largest drilling company, has struck a deal with Paris-based Schlumberger Ltd., one of the world’s biggest oilfield services companies, to jointly market services in Canada and the United States.

Precision said in a news release the deal will aim to increase the “industrialization of unconventional drilling in North America through an engineered approach” using Precision’s Tier 1 rigs and Schlumberger’s bottomhole assembly and services.

“Typically, the customers today would call Schlumberger and us separately and then tell us to work together on the rig,” Precision president and chief executive Kevin Neveu told the Herald.

“What we’re doing is telling our customers, ‘Listen, we can do all of that for you, we can combine it with our high-performance rig, and we can manage that interface directly.’”

Downhole tools operated by skilled operators are used to control and guide the drillbit as it follows a petroleum-bearing formation horizontally out from the vertical part of the well. The technology is key to delivering hydraulic fractures that have opened tight shale oil and gas plays in Canada and the U.S.

Precision is not obligated to use Schlumberger’s equipment, said Neveu. It has its own more limited downhole tool resources in Canada and the United States.

“We have our own suite of tools and we will continue to use those until those tools are worn out and then we can replace our tools or use Schlumberger’s tools. It’s sort of up to us,” said Neveu.

Analysts and the markets applauded Precision’s announcement, which was not matched by a Schlumberger news release.

Precision shares quickly rose to as much as $15.17 from Tuesday’s close of $14.40 in Toronto, but closed at $15.04, a 4.5 per cent gain, while Schlumberger was up one per cent on the New York Stock Exchange.

Analyst Scott Treadwell of TD Securities said in a note the news may allow Precision to expand its directional drilling business.

“We view the alliance with Schlumberger as a positive, as Precision will gain access to a suit of new and or improved technologies that would take substantially more time and capital to develop in-house,” he wrote.

“Providing an integrated service while increasing efficiencies and reducing costs along with providing new technologies should in our view attract potential new customers.”

Dan MacDonald, an analyst for RBC Dominion Securities, said Schlumberger’s technology is considered “leading edge” and substantially improves Precision’s services.

“This offering should help PD position itself even better with large E & Ps (including NOCs and IOCs) doing manufacturing style, resource play development as the combined products (Tier 1 rig and bottom hole assembly) should position it to maximize drilling efficiencies,” he wrote in a note.

Neveu said the agreement is “multi-year” and is expected to be a positive influence on Precision but wouldn’t give more precise guidance.

He said more detail may be presented with the company’s second-quarter results next week. Precision has 320 drilling rigs, including 204 Tier 1 rigs, and about 90 per cent of its work in North America involves horizontal or directional drilling.

Schlumberger reported first quarter revenue of $11.24 billion US — Precision had revenue of $672 million Cdn.

Wednesday’s deal does not cover international operations but Neveu said the companies currently work together in Mexico.

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